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US unemployment may be much worse than expected

As the coronavirus continues rapidly spreading across the US, economists expect initial jobless claims to hit new multi-decade highs for the second week in a row, with estimates ranging from four to nine million.

Fresh data set to be released by the US Labor Department later on Thursday is expected to show an even more dire situation in the country’s labor market and economy than last week, when the filings rose to a record 3.28 million. However, those figures may be corrected and turn out to be even higher as some states were overwhelmed with applications and couldn’t properly process them, according to Reuters.

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The week ending March 28 might see nearly four million in initial jobless claims, according to an averaging of forecasts. On the high end, Diane Swonk, chief economist for Grant Thornton, told CNBC that the number would surge to 9 million claims, but this may include some revisions to earlier data.

Goldman Sachs expects 6 million claims for the last week of March, while Bank of America puts it 500,000 lower at 5.5 million. According to a Reuters survey of economists, the benefits claims will be around 5.25 million. The lowest forecast of 2 million filings comes from JPMorgan Asset Management, according to Yahoo Finance.

The dramatic surge in those seeking unemployment benefits comes as the US has become the most affected country by number of Covid-19 infections, with total cases surpassing 216,000 as of Thursday morning. Prevention measures have reportedly placed around 80 percent of Americans under some form of lockdown and caused massive layoffs across the country. An unprecedented $2.2 trillion stimulus package could also add to the rise of jobless claims, as its provisions eased some requirements for workers seeking benefits.

Analysts who earlier shared gloomy predictions with RT said the US could face its highest unemployment rate ever, even worse than during the Great Depression.

Despite the disappointing jobless claims data, stock futures on key US indices rose before Thursday’s market opening, signaling that stocks may partly erase the losses they suffered in the previous session. Dow Jones Industrial Average futures were up almost 400 points, while S&P 500 futures and Nasdaq Composite futures rose more than one percent.